On Indian Co., tax implications under the Income tax Act and GST would arise
Under Income tax Act, provisions of transfer pricing (TP) and witholding taxes would apply on such remittance
- TP provisions are applicable to associated enterprises. As you are holding less than 26% of the share capital in the Dubai Co., TP provisions would not be applicable considering the above parameter only. Assuming you are having less than 26% of the voting rights in the Dubai Co. Need more details to determine the relation of associated enterprise such as who is holding the remaining 75% shareholding in the Dubai Co., authority to appoint directors in both the Companies, dependency of business activities etc.
- Payment for right to use a software is not a royalty. Plz share EULA for precise reply
- Before making foreign remittance, file Form 15CA, 15CB, Form A2 and copy of invoice with the banker
- It is an import of services and Indian Co. would be liable to pay GST on reverse charge mechanism. The Indian Co. is eligible to take ITC (input tax credit) of GST paid on such import of services
For detailed discussion you may opt for phone consultation